Beyond giveaways: Malls seek boost with 'activity' stores

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Malls struggling with shopper ennui are starting to see a glimmer of life in a new breed of retail chains that offer customers more activity than simply opening their wallet and signing a credit-card receipt.

The chains lure customers with the opportunity to participate in an activity, ranging from stuffing a custom-designed teddy bear to mixing perfumes to stir-frying vegetables. While sample giveaways and makeup demonstrations have long been part of the retail scene, these chains take the concepts much further. "They are new and innovative concepts which make the mall more of an action-pulsed place," said Eric Beder, VP-retail analyst at Northeast Securities.

Fastest-growing among the activity-based retailers is Build-A-Bear Workshop with 130 stores and plans for expansion in Canada, Europe and Asia. The stores provide customers with a selection of empty bear bodies that are then stuffed, fluffed and dressed in costumes ranging from bridal veils to baseball gloves. Customers use an in-store computer to print each bear's "birth certificate" and special wish.

`destination'

"We are a destination," said Teresa Kroll, who carries the title of "chief marketing bear" at the privately held chain that claimed sales of $107 million in 2001. The store experience provides "a vacation moment," she said, "and you don't have to drive very far."

Ms. Kroll said Build-A-Bear has grown mostly through word-of-mouth. The chain has hired Barkley Evergreen & Partners, Kansas City, Mo., to develop a brand positioning with an eye on a national print and a regional TV campaign.

Department store holding company Saks Inc. (parent of Parisian, Younkers and Saks Fifth Ave., among others) joined the club earlier this year. It bought Club Libby Lu, a chain of about a dozen experience-based stores aimed at preteen girls. Girls walk through a fantasyland environment, dressing as princesses and mixing fragrances. Saks plans to add the shops to some of its department stores and open additional mall-based stores.

A pioneer of the activity concept is Pleasant Company's American Girl Place, which in 1999 opened a Chicago store that included a theater, cafe, photo studio and doll hair salon. Now owned by Mattel, Pleasant plans to open a second American Girl Place on Nov. 8 on New York's Fifth Ave. Joan Tillman, VP-retail for American Girl, declined to break out sales for the store.

Retailers also are targeting adults with experience-based shops. The Limited's Intimate Beauty Corp. and Shiseido Co. are rolling out Aura Science, a chain that greets customers with a warm towel and offers customized skin-care products.

Viking Range Corp. has combined its kitchen appliances with cooking lessons through almost a dozen stores in two chains, Viking Home Chef and Viking Culinary Academy. The stores have built-in classrooms offering lessons in a full spectrum of cuisine from gingerbread-house building to Indian cuisine. Products in the store change to match the lessons.

Even big-box discounter Home Depot has added more instruction for customers as part of classes and events for its marketing mix.

Still, experts at the International Council of Shopping Centers say mall owners are focused on building product based on fashion, not necessarily fun and games. "I'm not particularly carried away with some of these ideas," said Michael Baker, director of research for the council. He noted that a number of once-hyped retail entertainment venues, such as Planet Hollywood and Rainbow Cafe, have scaled back considerably.

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